Both parties contributed to the initial burst of inflation during the Biden years with their spending splurge in late 2020. But Democrats in March 2021 fueled the fire with their $1.9 trillion spending blitz, largely for transfer payments and for states and localities. The Federal Reserve made the mistake of accommodating the spending binge. Yet as inflation heated up in 2021, Democrats urged the central bank not to raise interest rates.
The Biden team also relaxed mortgage underwriting standards, which enabled borrowers to qualify for bigger mortgages and turbocharged the surge in home prices. Housing prices rose 5.3% a year on average during the Biden years, compared to 2.7% during the first Trump term and 3.7% so far in the second.
Prices initially shot up more in Sun Belt areas during the pandemic owing to a demand shock from population migration. But as housing supply caught up, prices have stabilized in these markets. By contrast, home prices and rents are now growing fastest in the Northeast, West Coast and areas of the Midwest where local zoning regulations and burdensome permitting make it harder to build. Rent control and “just cause” eviction laws in progressive cities also deter new housing.
Over the last year, housing prices have grown significantly faster in metro areas like Boston (4.4%), New York City (4.4%), Minneapolis (3.7%) and Los Angeles (3.4%) than Dallas (1.9%), Atlanta (1.4%), Houston (0.3%) and Tampa (-0.6%).
It costs on average about 2.8 times as much to build an apartment in California as in Texas, according to the RAND Corp. Some “affordable” housing projects in the Golden State cost more than $1 million per unit to build. One reason is state and local prevailing wage mandates, which Democrats want to require for all projects that benefit from federal funds.
Democrats also want to raise the $7.25 an hour federal minimum wage to $15 or higher. Most Democratic-run states already impose minimum wages of at least $15 an hour, so this would mainly slam states with lower wage mandates, many of which have contested Senate races this year like Texas, Iowa and New Hampshire (all $7.25) and Ohio ($11). Businesses pass on higher wage costs to consumers to the extent they can.
To be credible, fiscal reforms must have bipartisan buy-in. Bondholders will not treat reforms as serious if they believe they’ll be repealed when the other party retakes power, and they’ll price that risk into interest rates.
Also warning of the dire consequences of the U.S. government’s fiscal incontinence is Doug Bandow.
Wall Street Journal columnist Kyle Smith rightly applauds the demise of “land acknowledgments.” Two slices:
Anguished white liberals tend to get society to rearrange itself to manage their neuroses regardless of what others think. That’s how the Washington Redskins lost their name; polls showed actual indigenous folks didn’t find it insulting. But it’s starting to sink in, even among the strenuously sensitive, that actual indigenous folks find these sanctimonious “We gather on the ancestral lands of the Tongva, Tataviam and Chumash peoples, the traditional caretakers of this water and land”-type statements to be somewhere between cringey and insulting. The writer Lionel Shriver notes that progressives want to be seen as good, whereas conservatives want to be seen as right. Land acknowledgments can’t be very good if indigenous people hate them.
As for whether land acknowledgments are right: of course not. Every piece of land on this planet has been conquered, reconquered and re-reconquered innumerable times going back to when Thok first hit Bok over the head with a club and stole his cave. It can’t be the case that all land belongs, morally, to whatever group was the second-to-last one to occupy it. Moreover, all cultures across civilizations and all the way back in time agreed, until very recently, that conquest was simply a law of nature. The indigenous inhabitants of North America, who were in many cases extremely warlike people, never disputed that.
…..
Instead of land acknowledgments, I offer another way to display gratitude for what came before us. What follows is my bank acknowledgment.
We produce this newspaper in a building that was recently recapitalized with a loan from Apollo Global Management. I write in an apartment financed by the JPMorgan Chase bank. We honor and respect these firms, who are wise ancestral caretakers of the streams of money.
In so doing, we channel the cooperative spirit in which businesses needing offices and people needing housing don’t need to put up the entire value of a building up front, but rather work together with a lender to agree on a rate of interest that each party believes will lead to a beneficial result. Neither side does this because of coercion, but out of self-interest. To quote Adam Smith on the actions of a hypothetical businessman, “he intends only his own gain, and he is in this, as in many other cases, led by an Invisible Hand to promote an end which was no part of his intention.”
So we could replace land acknowledgments with invisible-hand acknowledgments. People fulfill each other’s needs simply by looking after their own: one gets a building, the other gets profits. Isn’t that spirit of working together a nicer thing to contemplate than the history of conquest?
The Daily Dish is correct: (HT Scott Lincicome)
It is time to stop treating the outcome of tariff policy as a hypothetical. The experiment was run in 2001 and failed. It was re-run on a grand scale since 2017 and failed. It is not good economic policy. And in a month it will prove to be poor politics as well.
